Mortgage Q&A: “Are mortgage rates going up or down?”
Which way are mortgage rates headed? Clearly they’ve been trending down for the past couple months, but some speculated that we reached bottom.
At the time, he said any further downward movement would be “incremental,” adding that it was the time to buy that dream house.
A week later, the 30-year fixed fell to a new record low 4.78 percent, but subsequently climbed back up to 4.87 percent this week.
Of course, weekly fluctuation is standard, and doesn’t mean we’ve struck bottom or even began trending up.
Meanwhile, a pair of Bank of America/Merrill Lynch economists said earlier this week that 30-year fixed mortgage rates will slide to 4.20 percent by year-end, a substantial discount to today’s rates.
They noted that efforts to ease monetary policy and a generally weak economy will push mortgage rates lower.
Adding to this lower rate optimism were remarks from HUD Secretary Shawn Donovan, who told CNBC Thursday that mortgage rates will continue to fall.
But he stressed that the low rates were already making an impact, with home purchase applications up about 20 percent since the Making Home Affordable program was announced.
Interestingly, he made those remarks right after President Obama urged Americans to refinance NOW to take advantage of the super low rates.
And it’s probably also causing a lot of headache with the banks and mortgage lenders, who are likely experiencing a lot of indecision from borrowers playing the waiting game.
The promise of lower rates is causing prospective homebuyers to sit on the sidelines too, especially with lower home prices in the near future a pretty solid bet.
Perhaps that’s why low interest rates aren’t the best solution to a housing crisis.